By Dan Gillmor
January 11, 2000
America Online's buyout of Time Warner makes eminent sense for the two companies' shareholders. Consumers of information -- consumers in general -- should be somewhat gloomier.
This is quite a spectacle, ripe with New Economy ironies. AOL's huge market capitalization, spurred by a stock market that abandoned sanity long ago, left the world's most powerful traditional media company in the dust. AOL controlled the terms of the deal, and the combined company will reflect the new reality.
Like deals of the past, though, this one is about money and muscle.
AOL Time Warner will have more power over the creation and distribution of news and entertainment than any entity on the planet. It will obviously spur other media companies toward mega-mergers. The deal is also a victory for a vision of the online world that directly contradicts the early promise of the Internet. AOL is not a supporter of open standards, despite occasional rhetoric to the contrary. And it's an utter triumph for the e-marketers who see gigabucks in online commerce and highly targeted pitches to individuals. They see us as disembodied eyeballs to be attracted, demographic data to be mined and wallets to be emptied.
Fears of media concentration are rational even in a world of millions of Web sites. No one can dispute the power of the conglomerates to create and reinforce popular culture these days. Most consumers of news still turn to a few sources -- typically the sources with the most money to spend in gathering, disseminating and -- this is key -- promoting their news products. Ten million small sites won't begin to have the reach and power of the single AOL Time Warner (which includes CNN), and we are not better off for this.
AOL has made a couple of stabs at producing news in its short life, and you'll find some news on the service today. Yet for AOL, ``content'' -- as information and entertainment (and marketing pitches) are called on the Net -- hasn't been, even peripherally, about serious journalism. So in a sense this deal isn't one of those typical media mega-mergers, such as Viacom's recent swallowing of CBS, where one company will control even more of the traditional kinds of information and entertainment aimed at mass audiences.
But AOL, which has more subscribers than any other online service, has been creating other kinds of content, the kind visitors to cyberspace use all the time, including chat rooms, updated weather forecasts and -- above all -- shopping. So this is a merger that combines mass media with mass marketing in a larger sense.
AOL has been ethically challenged throughout its existence. I hate to see Time Warner, which has had its own ethical troubles but generally shows high journalistic standards, fall into such hands. Oh, Steve Case, AOL's chief executive and chairman-to-be of the new company, paid some lip service to journalistic duty at Monday's press conference. But when the biggest online company controls the biggest traditional media company, you'd be wise to turn to other sources for reliable information on, for example, e-commerce and its biggest players.
Case's commitment to open standards -- the very basis of the Internet -- is also doubtful. And that's a charitable view.
No company has complained louder than AOL about the cable-TV companies' refusal to open their fast data pipes to competing Internet service providers. Those complaints have been justified. Now that AOL will own some large cable-TV systems -- Time Warner is a big operator -- it'll have some of the wide-bandwidth access it hasn't been able to secure from AT&T and other monopolistic cable operators. Again, Case said all the right things about his continuing commitment to open access. I don't trust him to keep his word.
Watch the fine print, and remember history. AOL calls itself an Internet access provider. Yet from its earliest days, AOL's strategy has been to support open computing standards, on which the Net is based, only when they would help the company gain customers. Once those customers were signed up, AOL's goal was to trap them behind a wall of proprietary technology and content.
The cyber-marketing machine now under construction should also give you the creeps. AOL is notorious for its absolute disdain for customers' privacy. The combined resources of AOL and Time Warner will be a bonanza for merchandisers and marketers. (In this context, AOL's recently announced partnership with Wal-Mart could have more meaning than anyone anticipated at the time.)
For all the negative implications, the deal has its positive aspects. AOL has been looking for ways to put its service on new kinds of devices. If the buyout accelerates the ``PC-Plus'' era, when we'll get access to data networks via a variety of devices, not just personal computers, that's potentially good news for consumers.
There's another possible benefit. Maybe, just maybe, AOL will stop one of its most annoying marketing gimmicks. I refer, of course, to the company's incessant use of the word ``members'' -- the term it uses to describe customers.
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